CBN’s ban on 41 items seen propelling local tile manufacturing market

Rising demand and limited access to forex to facilitate imports are some of the factors driving the rise in local tile manufacturing. This is according to market research conducted by Nairametrics.

Some industry experts who spoke to Nairametrics opined that the country is no longer wholly dependent on imports to meet local demand for tiles. That’s because the product is currently being manufactured locally at a scale and quality good enough to meet local demands.

Understanding the CBN policy that underpinned the growth
To better understand the astronomical growth witnessed in the local tile manufacturing market, one will have to trace back to a series of interconnected events starting in 2015.

In 2015, the Central Bank of Nigeria introduced a policy which listed 41 items that were rendered invalid for foreign exchange at the official foreign exchange market. Included in the list were tiles – vitrified and ceramic. The item was number 34 on the list. Other items were wooden doors, furniture, and related building materials.

The apex bank hinged its decision on the need to stimulate local manufacturing by curbing excessive demand for forex. The CBN followed this with a series of intervention funds that targeted key sectors of the economy such as power, manufacturing, aviation, and agriculture. It believed these measures would help revive the manufacturing sector, allowing Nigerians to produce more of what they consumed.

The initial impact of the CBN policy

The controversial decision to ban imports initially rocked local trade, especially for importers. It also triggered multiple exchange rate depreciation over the next 4 years.

The trade and real estate sectors fell into multiple recessions as limited access to forex meant entrepreneurs looked inward due to government policies. It is also important to bear in mind that building local capacities takes time to materialize and often produces outcomes far more expensive than foreign alternatives.

However, things turned the corner during the coronavirus pandemic as trillions in government stimulus packages fueled growth across key sectors of the economy, including real estate.

Since 2020, Nigeria’s real estate market has witnessed positive growth every year, growing from about N8.9 trillion in 2019 to N10.2 trillion.